Japan Punishes Seven Cryptocurrency Exchanges, Suspending Two

The Japanese financial regulator has punished seven cryptocurrency exchanges in the country, suspending the operation of two of them. “The agency fears another Coincheck-style hack,” it stated after recent inspections of all crypto exchanges in Japan revealed inadequate measures for customer protection.

FSA Punishes Seven Exchanges

The Japanese Financial Services Agency (FSA) announced on Thursday that it had “punished seven cryptocurrency exchanges, ordering two of them to suspend business, in an effort to shore up consumer protection,” Reuters reported.

Bit Station and FSHO were ordered to suspend business from March 8 to April 7. The two are quasi-operators, meaning they are allowed to operate crypto exchanges while their registrations with the FSA are pending review. The agency has also asked the two exchanges to submit work improvement plans by March 22, the Mainichi reported.

In addition, Tech Bureau, GMO Coin, Lemuria Bitcoin Exchange (Bitcrements), Mister Exchange, and Coincheck also received improvement orders from the FSA, the news outlet detailed. The former two are fully licensed exchanges while the latter three are quasi-operators.

Since the revised payment services act went into effect in April of last year, cryptocurrency exchanges are required to register with the FSA. Sixteen crypto exchange operators have been licensed so far. In addition, sixteen more are permitted to operate crypto exchanges as quasi-operators. Moreover, there are reportedly over 100 companies seeking to enter the space and operate their own crypto exchanges.

The “FSA said a senior employee at Bit Station was found to have used customers’ bitcoin for the person’s own purposes,” Reuters detailed, adding that the exchange has ”dropped its application to become an authorized exchange.”

Issues Found During the Inspections

After Coincheck was hacked in January, the FSA started inspecting all crypto exchanges in the country. “The inspections target several of the country’s 16 licensed exchange operators and all 16 operators not yet officially registered with authorities,” Nikkei commented, adding:

While not yet complete, the FSA inspections have apparently found enough issues with customer protections and anti-money-laundering measures that the agency fears another Coincheck-style hack.

According to the news outlet, the FSA found the five aforementioned unregistered crypto exchange operators to be “particularly problematic,” adding that they will have to either “meet the agency’s requirements and complete registration or withdraw their applications.”

FSA Says Coincheck Has Enough Funds

When Coincheck was hacked in January, 58 billion yen (~USD$550 million) worth of the cryptocurrency NEM was stolen and the greater cryptocurrency market took a significant tumble.

Following the incident, the FSA issued the exchange a business improvement order and demanded that “the company strengthen oversight and management of systems implicated in the NEM hack,” Nikkei explained.

Coincheck promised to repay its customers a portion of their lost funds but many questioned whether the exchange had enough money to do so. The FSA announced on Thursday that it has verified that Coincheck has enough funds to repay its customers as promised.

What do you think of the FSA punishing seven crypto exchanges? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

In Case You Missed It

Introducing Bitcoin Cash Charts – a Graphical Constellation of BCH Data. Bitcoin.com is pleased to announce our new Bitcoin Cash Charts web portal a site that’s dedicated to providing the public with a beautiful and rich display of the BCH ecosystem… read more.

Most Commented This Week

Listen to The Bitcoin.com Podcast Network

Latest Podcasts

we are hiring

News.Bitcoin.com is Hiring Editorial Staff – In Tokyo, Stockholm and Your Town. Are you an experienced news editor or a news reporter with a nose for crypto? We are on a roll – increasing our readership every day – serving millions of readers each month… read more.

Latest Comments

Arguan Modeth

Crypto could face resistance from the powers that be because it doesn't allow inflation or control...

The Bitcoin.com Wallet: Available on all platforms

Download the Bitcoin.com Wallet right to your device for easy and secure access to your bitcoins. Perfect for beginners, the Bitcoin.com Wallet makes using and holding bitcoins easy. No logins required.